Order book and sales pipeline underpinning medium term growth expectations

RedstoneConnect (AIM: REDS), a leading provider of technology and services for smart buildings and commercial spaces, is pleased to announce that trading has continued to be strong in the second half of the current financial year and consequently the Board now expects Adjusted EBITDA* for the year ending 31 January 2017 to be at the upper end of market expectations**.

Smart software solutions

The Company’s smart software solutions continue to gain market traction with encouraging levels of customer engagement. RedstoneConnect’s ability to secure new software income, which is typically achieved through annuity based contracts with higher margins, is a key constituent of the Company’s growth strategy.

OneSpaceTM, the Company’s occupancy management tool, is now ready for full commercial deployment following investment during 2016 and an experienced sales force has been recruited. Notable milestones include its deployment at UBS's new flagship London office at 5 Broadgate, deemed to be the smartest building in London and the extension of the Company’s relationship with UBM to upgrade and extend OneSpaceTM to UBM’s offices in New York.

The Company also signed an agreement with Philips Lighting under which it will integrate Philips Lighting systems into OneSpaceTM and together market and deliver connected smart office solutions.

In addition, following the success of the initial design phase RedstoneConnect has secured the mandate for the deployment of its smart parking, smart retail and wayfinding applications as part of the smart city project in Milton Keynes.

Network infrastructure and managed IT services

RedstoneConnect continues to see strong demand from both new and existing blue chip customers for its design and installation of network infrastructure and managed IT services. This demand underpins a considerable order book and sales pipeline. Having already signed a 5 year contract renewal in the first half with one of the world’s leading financial institutions, the Company has expanded an existing managed services contract with the same customer to include the provision of IT infrastructure management services across a number of campus buildings. The contract extension is valued at £8.4 million over three years.

In addition, the Company has also signed the renewal and expansion of a three year managed services contract, worth approximately £5.4 million, with a tier one global investment bank.

Acquisition of Commensus

The Company is also pleased to report that Commensus, a leading provider of fully managed IT support services, which was acquired in November 2016, is now fully integrated. Commensus has already won three important new customers since its acquisition and will be earnings enhancing in its first full year of ownership.

Mark Braund, CEO of RedstoneConnect, commented:

“We are delighted to report excellent progress across the Group with significant momentum continuing in the second half. We have secured a number of new business mandates within our infrastructure and managed IT services division and continue to deliver high quality contracts through our software solutions for smart buildings. The Board is confident that this will, in time, transform the future earnings potential of the Company.

“We now have a well-structured and cost efficient operational base and a substantial new business pipeline. The board therefore looks forward to the future with great confidence.”

* Results for the period from continuing operations before net finance costs, depreciation, amortisation, integration and transactional items, impairment charges and share based payment charge.

** Adjusted EBITDA market expectations for the year ending 31 January 2017 are between £1.5 million to £1.8 million.